As an old hand in the cryptocurrency circle, I have been trading in the cryptocurrency circle for 10 years without realizing it. It is not easy to survive in the circle until now! I have been beaten by dog dealers before, and I have experienced many liquidations. I have been confused and have smoked one pack of yan after another in a dark corner. This is the price paid for growth! From entering the cryptocurrency circle at 5 to making a big profit of 10 million, to being in debt of 8 million, to making a profit of 20 million, to the current financial freedom! I have mainly mastered the contract skills. Playing contracts in the currency country is like playing with heartbeats, thrilling, and more exciting than riding a roller coaster.
Thousand-fold contracts, which seemed risky at first glance, were actually my most profitable and highest-performing investment. I was confused by this at first, but then I gradually realized that this was mainly due to the fact that I had inadvertently followed a clear set of trading rules:
1. Total warehouse setting: The funds I use for contract trading are always fixed. For example, the funds of an account are always 300U. This means that my maximum loss is 300U, and once the market trend is favorable, I have the opportunity to obtain a lucrative profit of tens of thousands of U. This setting allows me to keep the risk under control and seize the profit opportunities brought by the big market.
2. Starting amount: My initial trading amount is always very low, which is based on the philosophy of the stock tycoon Livermore. He believes that if the beginning is right, then it is best to make money from the beginning. Therefore, the amount I start with is always small. Even if the total position is 300U, the initial amount is often only single-digit or tens-digit U, which can ensure that I am in a profitable state at the beginning of the transaction.
3. Position-adding strategy: I will use profits to add positions only when there is profit and the trend is obvious. This strategy allows me to further magnify profits when the market trend is favorable, while avoiding increasing risks in an unfavorable market environment.
4. Stop loss setting: I will adjust the stop loss position in time according to market conditions to ensure that I will not lose my principal.
This is an important principle I stick to in trading. It helps me stay calm in market fluctuations and avoid emotional trading decisions. These four rules have made me strictly abide by trading discipline. The logic behind them also applies to ordinary low-multiple contracts, because the principles are the same. Of course, before I start, I still want to remind novice players:
Contract trading is no joke, especially for those who think there is some contract trick or contract guru who can predict prices. Don't blindly believe that you can make a lot of money just by listening to them. Never have this idea. Anyway, I don’t have any secret that can make you rich as soon as you hear it. Moreover, contract trading is a test of human nature, unless you can stick to using only a very small amount of money, such as 100U, 300U, etc., then it is in line with the strategy of "small risk for big wins" rather than "big risk for small wins". What I share is the method, hoping to give some reference to contract players. In fact, playing in the currency country is a contest between retail investors and bankers. If you don’t have super professional skills, you can only be harvested! If you want to make a layout and harvest the banker together, you can come to (public account: trend prediction). Welcome like-minded people in the currency circle to discuss together~
What are the types of contracts: Perpetual contract: Perpetual contract has no expiration date, users can hold it forever and close the position by themselves.
Delivery contract: Delivery contracts have specific delivery dates, including weekly, next-weekly, quarterly, and next-quarter delivery contracts. When the specific delivery date arrives, the system will automatically deliver regardless of profit or loss.
USDT margin contract: It means that you need to use the stablecoin USDT as a margin asset. As long as there is USDT in your account, you can conduct contract transactions in multiple currencies, and the profit and loss are settled in USDT.
Currency-margined margin contracts: The underlying currency is used as the margin asset. The corresponding currency must be held before trading, and the profit and loss are also settled in this currency.
Perpetual contract money-making skills:
1. How should funds be allocated to avoid full positions? Fund allocation should be understood from two levels: First, understand fund allocation from the perspective of risk. First, make it clear how much loss our account can or is prepared to bear. This is the basis for our thinking on fund allocation. After this total amount is determined, we can consider how many times we should lose to the market if we lose consecutively in the market, so that we can willingly admit defeat.
I personally think that the riskiest method should be divided into three times. In other words, you should give yourself at least three chances. For example, if the total amount of account funds is 200,000, and the client allows you to lose up to 20% or 40,000, then the riskiest loss plan is: 10,000 the first time, 10,000 the second time, and 20,000 the third time. I think this loss plan is reasonable. Because if you do it right once in three times, you can make a profit or continue to survive in the market. Not being kicked out of the market is a success in itself, and there is a chance to win.
2. Grasping the general trend of the market is much more difficult than trading with fluctuations, because the trend is to chase highs and sell lows, and you need to have the determination to hold positions, and buying high and selling low is in line with human nature. The more trading is in line with human nature, the less money you make. It is precisely because it is difficult to do that you can make money.
In an upward trend, you should choose to go long on any violent pullback. Remember the probability I mentioned? So, if you are not on the bus or have gotten off, wait patiently. If there is a drop of 10~20%, go long boldly.
3. Specify the stop-profit and stop-loss targets. Stop-profit and stop-loss targets can be said to be the key to whether you can make a profit. In several transactions, we must make the total profit greater than the total loss. It is not difficult to achieve this. Just do the following:
① Each stop loss ≤ 5% of the total funds; ② Each profit > 5% of the total funds; ③ Total transaction winning rate > 50%
If the above requirements are met (profit-loss ratio greater than 1 point and winning rate greater than 50%), you can achieve profit. Of course, you can also have a high profit-loss ratio and a low winning rate, or a low profit-loss ratio and a high winning rate. Anyway, as long as the total profit is positive, the total profit = initial principal x (average profit x winning rate - average loss x losing rate).
4. Be careful not to trade too frequently. Since BTC perpetual contracts are traded 24 hours a day, many novices will trade every day. They would like to trade every day for 22 trading days a month. As the saying goes: If you walk by the river, you will get your shoes wet. If you trade too much, you will always make mistakes. After making mistakes, your mentality will become bad. If your mentality becomes bad, you may act impulsively and choose "retaliatory" operations: you may go against the trend or hold a large position. This will lead to one wrong step and another, which can easily cause huge losses on the books, and these losses may not be recovered for several years.
The most stable way to play the cryptocurrency contract is to choose the right currency and be a good person. As a leveraged trader, volatility can be amplified by leverage multiples. The primary consideration in the trading process is not volatility but certainty.
In an uptrend, go long on strong currencies, and conversely, in a downtrend, go short on the weakest currencies. For example, at the beginning of a new quarter, eos and eth had the strongest gains, and these two currencies were the first choice for going long when the market fell back. In a downtrend, bitcoin was the first choice for shorting. Even if the final result was that the mainstream currencies fell more than bitcoin, only shorting or chasing short bitcoin can avoid the risk of violent pullbacks to a great extent. Most of the traders in the currency circle are short-term traders. When trading, it is difficult for them to have the opportunity to hold on to the ideal point to close the position. At the same time, they are not very proficient in position control, and they cannot rely on shocks to do T to pull the average price. Based on this situation, for most traders, a good opening price is more important than anything else.
Once there is a profit, sell part of it first and lock in the profit, and set a stop loss at the cost price for the rest. This is what I have always emphasized in my own community.
As for the main skills: first, transfer USDT to the contract account of the exchange (or exchange), but the total amount will not exceed 300U. This amount is set according to the proportion of my personal spot trading funds. Generally speaking, you can also determine the transaction amount based on 1% of the total funds, but each transaction should not exceed 300U (this limit is limited to dry multiple contracts).
In addition, I don’t recommend trading methods such as 100x contracts because the risk is too high and the cost-effectiveness is low. Either choose a low-multiple contract below 5X and hold a large position, or choose a high-multiple contract of 500-1000X and trade with a very small position. It is best to choose only the latter method, because contract trading will inevitably lead to liquidation, even for low-multiple contracts, and a 1,000x contract will either cause a liquidation of 300L or gain huge profits. In general, the profit-loss ratio is extremely large.
Therefore, if you master the correct method, you will most likely make money with the 1,000x contract. However, if there is no ADL forced liquidation mechanism in the exchange, you will most likely lose all your money. Previously, my group friends and I directly took down the 1,000x contract of A.com.
What I want to emphasize is that the essence of contract trading is to use small to win big rather than use big to win small.
In addition, due to the extremely high multiples of the 1,000x contract, the handling fee and funding fee have become relatively unimportant. Whether you can open the right position is the most important thing. Moreover, the handling fee of the 1,000x contract is much cheaper than other contracts at the same ratio. From another perspective, contract trading is actually borrowing money to open an order, and the borrowed money only needs to pay interest. If the position is liquidated, there is no need to pay back the money. This is actually a very good investment target.
Of course, if you don't trade according to my rules, you will lose money very quickly. The most important thing is position management: position management includes fund management and risk control. Don't understand the meaning of the word position. Position is more about when to add positions, how much to add, where to reduce positions, and how much to reduce. That is, the roadmap of "entering the market, adding positions, reducing positions, and exiting the market". Then the complete trading process should be:
1. Market analysis, you can use any technical analysis.
2. Position management. After entering the market, you need to consider what might happen next. What to do with profits? Should you add positions, or exit with full profit, or continue to hold? What to do if profits expand again? What to do if losses occur? Should you stop loss, hold the order, or exit partially first? How big a loss will you exit completely? Position management will consider both risk and return factors.
3. Strictly execute transactions. When you have a clear plan, you should start to implement it. Don’t let market fluctuations disrupt your thinking.
4. Summarize the transaction. After a transaction is completed, it is necessary to review the transactions in the previous period. The review samples should cover the three market states of rising, falling and oscillating. Then, on this basis, we can improve and optimize the market analysis, position management, and the process of executing transactions. We must first find the entry point according to our own trading skills. This position must be a support line. When the market is above the support line, the trend is upward, and when the market falls below the support line, the trend is downward: More importantly, the support line is also the basis for us to define potential risks. When the stop loss is placed below this support line, the potential risk range is determined. If the initial stop loss area below the support line is touched, you should leave the market first or close most of the positions first, and then gradually close the positions as the decline continues until all positions are closed.
Then, the potential profit margin is above the support line. The upward trend of the market has not ended, so the potential profit is theoretically unlimited. After entering the market, we can hold the original position and wait for the rise, or reduce the position on the basis of the original position. We will move the stop loss according to the development and changes of the market. When the market is as we expected, we should move the stop loss to the support line that is closer to the cost price or has a certain range. Moving the stop loss is to continuously reduce the risk margin in the market, which is equivalent to locking in floating profits.
When the price rises to a new support or resistance level again and starts to fall back, then the area below this support or resistance level is the position reduction area. At this time, we need to gradually close all positions. To summarize: First, we need to find a support and pressure line of the cost price. When the price rises away from the cost line, we gradually increase our positions, and the increase in positions must be decreasing. When the price falls away from the cost line, we gradually reduce our positions, and the reduction in positions is also decreasing. Your position management technology must take into account both risks and returns.
Shen Dan is still making plans every day!
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